Originally Posted by philtrick123
When I looked at the front loading of PCP's, the only way I could get the APR to work in my excel calculator (based on the BMW PCP quote) was to front load the interest and then set the interest rate to 0%. This means that for the first few months of the PCP you are paying interest only BEFORE you even start on paying the capital off. Hence the need for some sort of gap insurance.
I can't see any advantage of paying a PCP off early- you'll have to pay the interest regardless because its part of the loan.
There might be a clause in the PCP contract where they will give you a small nominal sum back for early settlement. I'll try to dig out my agreement later.
The BMW Select agreement has some weasely words that say they will reduce the figures for early settlement by 'less any rebate of charges allowable by law'.
What that means in practice is vague. There is law in the UK related this matter- 2004 Early Settlement Regulations. Google it to find the various calculators- but you'll need to 100% check with BMW finance if it applies to their contracts + there are no additional early settlement fees.
Minefield is the word that comes to mind